Skip-Payment Mortgage

Skip-Payment Mortgage
A mortgage program that allows the borrower to skip (not pay) a mortgage payment. Depending upon the specific lender, there is generally no charge associated with skipping a payment. However, the interest accrued over the skipped-payment period is added to the principal balance of the mortgage, and the remaining amortization schedule is recalculated in a process called "deferred interest" or "negative amortization".

Skip-payment mortgages are not widely marketed in the United States, but they are widely available in other countries, like Canada. Some skip-payment mortgages allow the borrower to skip up to four months of consecutive payments for reasons such as family issues or sickness.


Investment dictionary. . 2012.

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